Keenly watching to see which way the oil windfall blows
Politicians seeking to enrich themselves will again be out of their depth in this racket
TOTAL’S discovery of net gas condensate off the coast of Mossel Bay was celebrated by President Ramaphosa in his State of the Nation address: “This could be a game-changer.”
But for whom? South Africa has hardly distinguished itself in the oil business in the past.
UN oil sanctions on apartheid South Africa (sadly) did not cripple the regime. Marc Rich, the founder of Glencore (famously pardoned by former US president Bill Clinton), boasted that sanctions-busting during the apartheid era was his most profitable business.
Under former president Thabo Mbeki, South Africa was again fingered for busting UN oil sanctions, this time against Iraq. Glencore was among the ultimate beneficiaries. By 1995, sanctions were crippling Iraq. Its people were starving. The UN instituted and supervised an “oil for food” programme to allow humanitarian supplies to reach the Iraqi people while not enriching the government.
In practice, Saddam Hussein set kickback amounts on oil sales by Iraq. Kgalema Motlanthe and Tokyo Sexwale unsuccessfully tried to argue for an exception for South Africa. Then energy minister Phumzile Mlambo-Ngcuka became aware of the kickbacks and directed her officials to address the problem. Three South African companies – Montega, Imvume and Mocoh – were involved in paying kickbacks for oil purchases.
Glencore financed Montega’s oil purchase (via a letter of credit from BNP Bank) while insisting its name be concealed from disclosure. Imvume and Montega’s representative, Sandi Majali, misrepresented to the Iraqis that he was an adviser to the ANC and Mbeki. The International Criminal Court (ICC) jumped at this and accused the ANC of “programme manipulation”. Meanwhile, Glencore lifted and sold the oil in Singapore rather than the US (contrary to Majali’s agreement), and left Majali to face the music.
Separately, Michael Hacking, a British co-director (with Tokyo Sexwale) of Mocoh, relied on Sexwale’s profile to secure contracts. Hacking then authorised payment of kickbacks through a Jordanian bank without Sexwale’s knowledge.
In 2006, Mbeki attempted to clean South Africa’s slate. He appointed a commission of inquiry to check the ICC’s evidence and advise him.
The commission was accused by white liberals of covering up for Motlanthe and Sexwale (absurdly as they were not accused by the ICC and were only witnesses) and by Mbeki’s detractors of being a tool to compromise his political challengers. Today the report’s significance is in exposing the naivety and often comic ineptitude of South African politicians and business people grossly out of their depth in the oil racket.
The commission had no remit to investigate yet another huge oil-based corruption scandal, where again Majali and Glencore were key actors. PetroSA, South Africa’s state-owned oil company, paid a R15 million advance to Imvume for oil condensate procured from Glencore. Within days, Majali transferred the lion’s share to the ANC. PetroSA had to cover the shortfall and pay the same amount again.
Years later, under former president Jacob Zuma, the government took the unprecedented step of selling the country’s entire strategic fuel reserve at $10 below market price, giving R1.5 billion profit to the purchasers. South Africa was left with no strategic oil reserve.
Glencore was among the purchasers. So great was the fallout for South Africans involved in deals that any South African who imagined enriching themselves through oil will wish they had never gone near the stuff.
This is for the most part because experienced and corrupt oil players did what they always do and left naive South Africans holding the smoking guns while they ran off with the loot.
So when Ramaphosa says “watch this space”, we’re watching, but only to see which politicians seek to enrich themselves, and how Total ends up screwing them over. We’re watching as we do a TV drama, not because we believe this oil bounty will in any way enrich everyday South Africans.
This could be a game-changer, but for whom? SA has hardly distinguished itself in the oil business in the past